The Supreme Court of South Carolina recently held that a prescribed alternative means of service from service through the South Carolina Department of Insurance can support a default judgment. White Oak Manor, Inc. v. Lexington Ins. Co., 753 S.E.2d 537 (2014).
A nursing home resident sued the nursing home after sustaining injuries. The insured settled the lawsuit without the involvement of its insurer, but subsequently filed a declaratory judgment action for a declaration of coverage for the claim. The insured served its insurer by mailing the summons to the address listed in the service of suit clause in the policy, where the summons was accepted by an unknown individual. The insurer thereafter evidently misplaced the summons and failed to respond to the complaint. Default judgment was entered against the insurer, and the insurer moved to set aside entry of default, alleging insufficient service of process. The insurer argued that service on an insurer could be effected only by service on the South Carolina Department of Insurance as required by South Carolina Code § 15-9-270. The trial court denied the motion to set aside because it found that the parties had contractually agreed to another means of service and that the insurer had substantially complied with it. The court of appeals reversed, holding that the only permissible way to serve an insurance company is by serving the South Carolina Department of Insurance, and the insured appealed.
Reversing, the South Carolina Supreme Court held that parties are free to agree to alternative methods of service and that the insurer was bound by its own policy’s terms. The Supreme Court concluded that service of process is intended to provide notice and obtain personal jurisdiction, and that an insurer can designate in its policy a method for an insured to accomplish these goals, which it found was done.